Corrupt strata and executive committee

barflairer said:
I'm in need of some desperate help.
I own a unit in a large apartment complex and about 6 months ago, 5 home owners lead to what I can only describe as a coup to get themselves elected on the executive committee and get rid of our existing strata company.

There is a lot in your post so I will try to work through it;
Coups are common in strata and strata is set up so as to accommodate such things. Strata living can become a numbers game and if one group has the numbers then “coups” occur. 

These home owners visited and wrote to as many home owners as possible without notifying the existing strata company and requested home owners to sign a proxy to fire the existing strata company. They complained about the existing strata company and made up a number of false problems that they accused the strata company of neglecting. What this group of home owners failed to tell each home owner while coercing them to vote in their favour was:

1. The strata company they were replacing our existing strata company was a self employed person that is a personal friend to one of home owners.

2. This self employed person has no prior experience to managing a strata plan and had registered his company and got his strata licence months prior to securing the management of our strata plan.

People behind coups can lobby as hard as they like but misleading and misrepresenting is not a good look for them if it is discovered they have sunk to such lows to get their way.  If you can show the other owners they have been “had” then next AGM can undo what has been done.
Without more information there may be an issue relating to clause 2 of Sch 6 of the Property Stock and Business Agent Regs 2009; was the proposed agent instructed by the OC not to disclose, was there disclosure, was there even a need; more information required.

At the AGM these home owners elected themselves and voted each other into the executive committee. Since then, along with the friendship of the strata manager, they have been incredibly corrupt. They have assigned $5000 to rectify external building issues of one committee members unit and spent a large amount of money doing up the garden area outside another committee member. Our maintenance costs have also sky rocketed since they changed all the maintenance contractors and the new cleaning person told me that his boss is good friends with the chair of the executive committee.

The question for me is did all this happen compliments of duly passed budgets,resolutions and a proper election. If these people are properly elected, passing appropriate resolutions to undertake these actions and they are spending money duly budgeted for such purposes then it may be a case of them feathering their own nest by virtue of position. Speaking generally; budgets are passed at the AGM and the EC administer the funds and see that money is spent according to the budget and the wishes of the AGM.
If money is allocated for building maintenance and the EC undertake work outside an EC members lot then it is hard to make a case for corrupt management – a lack of fairness or lack of equity may be obvious to another owner in the complex but it is easy enough to justify such actions from underneath the OC umbrella; i.e it is easy for the EC to say it is just the  EC carrying out its duty to maintain
If these people are spending money that has not been allocated for the purposes they are spending the money on, then they are most likely breaching some part of the Act.
If, when you say large complex, you mean a large SP as defined by the Act (100+ units) then there are spending restrictions such as only spending on budgeted items and not overspending a budget by more than 10%; that is broadly speaking.

Anyone that speaks out about their behaviour is punished. I requested to renovate my kitchen and was only replacing old with new so did not involve any structural, plumbing or electrical work and yet I was not allowed to go ahead. I demanded a reason and they are yet to provide one.

From a post on another issue in this forum comes the following: “However, an owners corporation cannot restrict what an owner does within their lot. This is beyond the power of the owners corporation.” 
Simone Balsara Lawyer, TEYS Lawyers, The Strata Law Experts

There is a reference from a Supreme Court case that I need to re-find that mimics these words. If you are not undertaking work that interferes with the common property or any structural cubic space then it is really no business of the OC what you do in your lot as long as it is lawful.

My neighbour who lives next to a committee member was abused by the strata manager after he used a drop saw to make 4 quick cuts of wood at 4pm in the afternoon. I live next to him and heard the saw buzz for about 5 seconds each time and he was told the committee member was distressed at the noise pollution. When my neighbour said he was acting within the noise restrictions and that it was 4pm in daylight conditions, the strata manager accused him of being an inconsiderate home owner and threatens to pass a new by law stopping any such noise.

These people sound like they are suffering from what I call “Little Kingdom Syndrome”. It is their strata plan, they control what goes on and you can always sell if you do not like it. It is a sad but common state of affairs.

What can be done to stop this corruption? I'm afraid these people will do long term damage to the finances and property.

I can only suggest you make sure there are existing budgets for the work these people are doing, that existing budgets are not overspent and that proper resolutions exists to do the work if the work goes beyond maintaining and repair of the common property.

Go to EC meetings if you can, read your minutes carefully, talk to the other owners about your concerns, keep records of everything and stay vigilant.
If budgets and resolutions do not exist, if there is overspending or spending on items for which no budget exists, then you may need to visit CTTT.

Consider the following:
The legislation has always envisaged that generally, strata schemes would be managed by ordinary lot owners for their own benefit…..

J Bordon: Nulama Village P/L v Owners Strata Plan 61788 (Strata & Community Schemes) [2006] NSWCTTT 550 (25 September 2006)

The autonomy given to SPs allows for people to gather numbers, effectively take over an OC and get away with all sorts of self interest activities. The term “for their own benefit” sometime only refers to a clique inside the OC and it is often extremely difficult to have objective proof of a self interest groups looking after each other at the expense of others.

Strata owners who want better protection of their rights should check out:

https://www.strataadvocate.ca

NB:  This is a Canadian website but you can read it if you want -JT

The key is to be organised and committed.  Get some like-minded owners together and get to work.

First of all, talk to local real estate agents about the difference it would make to values of properties in your building  – both in terms of sale and rents – if the building was smartened up and run properly.

Then get a hold of the strata roll and write to every owner, non residents especially, quoting these people extensively, telling them how much the continuing mismanagement of the building is costing them. 

If you can, include pictures of some of the worst examples of neglect and bad management.

Include your own proposals for improving the building and something that says the current incumbents have been given a chance time and again and have allowed the building to be run down. (NB: Don’t name names, it will just get you into trouble you don’t need).

Also include Proxy forms which you can download from a link on the “Essential Links” page on this website.  If you can afford it, include stamped addressed envelopes.

Talk to people either personally or on the phone,  everyone has an gripe in strata so listen and promise them that things ar going to change.

It’s a simple fact of strata life that the chairs of owners corporations are given proxies by people who don’t know them, and have little idea of how the building is being run or even looks.  However, if you tell them they are losing money, they will get interested enough to change things.

Try if possible to make this NOT about personalities and more about problems that aren’t being addressed.  Ask for the other owners support in calling an EGM to sack the current EC and elect a new one that is more interested in maintaining the building.  When you have the 25 percent of unit entitlements that you need to call an EGM and the 50 percent of votes, including proxies, to change the Executive Committee, start the process.

And be careful what you wish for … taking control of the EC is one thing, running a clearly dysfunctional building is entirely another.

By the way, if the strata manager is obstructive by, for instance, refusing to let you see the strata roll – he has a vested interest in protecting the status quo – explain to him that things are about to change whether he likes it or not and he can choose either to be part of the problem or part of the solution.  His decision will not be forgotten when the new EC is installed.

There is another route you could take which would be to ask the CTTT to appoint a manager to take over the duties of the EC but this is such a tricky and unreliable process – with no guarantee of a desirable outcome – that I would only recommend it in the most extreme circumstances.